Japan officially ends GSP treatment for China

Japan officially ends GSP treatment for China

From April 1st, Japan officially ended the GSP treatment for China. Prior to the GSP tariff preference, the average tariff rate was about 3%. After the GSP treatment was abolished, the average tariff rate of goods exported to Japan would rise by about 3 percentage points, and some products even went up by more than 10 percentage points.

The adjustment of this policy will have a significant impact on Chinese export enterprises, especially chemical and textile enterprises.

Taking Zhejiang as an example, according to Hangzhou Customs data, Zhejiang Province exported 83.7 billion RMB to Japan in 2018. In that year, Hangzhou Customs issued a total of 24,569 GSP certificates for the products exported to Zhejiang, with a value of 6.1 billion RMB. The tariff reduction is about 180 million RMB. The main visa products are textiles, chemical industrial products, plastic products, water and sea products, steel products, meat and fish products, and mechanical and electrical products.

After the implementation of the New Deal, only Zhejiang’s chemical and textile products will reduce tariffs by 80 million RMB in Japan.

Japan has granted China’s GSP treatment since 1980, and it is the GSP-beneficial country with the largest tariff preference. In December 2018, the Ministry of Finance of Japan officially announced the target countries for re-adjusting the “ex-gratia tariff” system, and removed five countries including China, Mexico, Brazil, Thailand and Malaysia from the list of tariff reductions for developing countries. The GSP treatment in Vietnam, Indonesia, India and other countries is still retained, which means that compared with these countries, the price competitiveness of Chinese products will be weakened, and Chinese products will face more intense competition.

In addition, some Japanese-funded enterprises set up production bases in China, and purchase domestic raw materials to manufacture products and then sell them back to Japan. The increase in tariff costs may cause Japanese-funded enterprises to reconsider the global production base allocation and cancel the plan to expand investment in China.

In this regard, Hangzhou Customs recommends that enterprises in the district should continuously optimize product structure, improve product quality and brand value, and gradually get rid of the price advantage; on the other hand, continue to make full use of the preferential policies of origin to enhance the international competitiveness of products. The specific recommendations are as follows:

  1. Actively explore new overseas markets, especially the national markets along the “Belt and Road”; use 15 FTAs ??and 3 preferential trade arrangements signed by China to fully enjoy the products provided by ASEAN, Australia and other free trade partners. Tariff concessions;
  2. Make full use of the GSP treatment in other countries to “borrow the ship to the sea”, such as enterprises that have established production lines in the GSP beneficiary countries such as India, Indonesia, and Vietnam;
  3. At present, China is actively promoting the negotiation of the Regional Comprehensive Economic Partnership Agreement (RECP) and the China-Japan-Korea Free Trade Area with countries such as Japan. Enterprises and industry associations can provide industry opinions to relevant departments and strive for better export products. Opportunities and environment.

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